A Strong Offense
A Stronger Defense
A common theme of plaintiffs in lack of capacity cases is that some kind of cognitive impairment, such as dementia, chronic alcoholism, or major depression, by itself indicates that the grantor or testator lacked the requisite capacity to create a trust or will, respectively. In Dorsey v. Ratz (link from Justia), a Maryland federal court recently looked at whether the diagnosis of major depressive disorder and alcohol dependence suggested incompetence when it came to executing a change of beneficiary form on a life insurance policy.
William Ratz died from acute alcohol intoxication. Approximately a year and a half before he died, he named his daughters as co-beneficiaries of a life insurance policy. But, about a year later and 5 months before his death, Ratz executed and submitted a change of beneficiary form designating his second wife, from whom he was recently divorced, as the sole beneficiary. Ratz’s daughters challenged that change of beneficiary form on the grounds of undue influence and lack of mental capacity. The federal court denied their claims on summary judgment.
The record showed that Ratz suffered from alcoholism and likely relapsed following the divorce. Ratz’s alcoholism, however, was not de facto incompetence. The key evidence was a physician’s report when Ratz was discharged from a treatment facility 10 months before his death. While Ratz was diagnosed with major depressive disorder and alcohol dependence, Ratz’s thought process was described as “linear, logical, and goal directed.” Among many other statements refuting incapacity was a notation that “[c]ognitively, he was functioning within his education level.” Ratz’s daughters did not offer any expert testimony or other admissible evidence that contradicted this physician report, and, therefore, their claims were dismissed.